Subaward Indirect Cost Threshold and Accounts
Effective October 1, 2024, the Office of Management and Budget (OMB) revised the Uniform Guidance (2 CFR 200) to increase the Modified Total Direct Cost (MTDC) threshold applicable to subawards from $25,000 to $50,000. Application of the increased threshold is permitted only after it is reflected in an institution’s current Negotiated Indirect Cost Rate Agreement (NICRA).
At this time, Drexel University’s institutional NICRA has not been updated to incorporate the revised $50,000 MTDC threshold. Accordingly, Drexel must continue to apply the $25,000 subaward MTDC threshold for indirect cost calculations until a revised NICRA is formally approved.
The Academy of Natural Sciences of Drexel University, which maintains a NICRA negotiated separately from the University, is currently the only Drexel affiliated entity authorized to apply the $50,000 MTDC threshold.
Drexel University is currently in its Facilities & Administrative (F&A) base year and expects to submit its next indirect cost rate proposal by December 31, 2026. While approval of the resulting NICRA would be targeted for July 1, 2027, approval timing is subject to review by the University’s cognizant agency, the U.S. Department of Health and Human Services (HHS), Division of Cost Allocation, and cannot be guaranteed, particularly in light of recent staffing reductions at the federal level. Once approved, the revised $50,000 subaward MTDC threshold will become effective institutionally. Until that time, departments should continue to follow existing subaward IDC practices, apply the $25,000 MTDC threshold, and use only currently approved Banner (Chart D) account codes. The revised $50,000 threshold and related codes may not be applied retroactively.
Subaward Account Codes
The tables below provide details on the utilization of existing and new subaward account codes:
- Table 1 reflects existing account codes used today under the $25,000 MTDC threshold.
- Table 2 reflects newly established account codes that support a future $50,000 MTDC threshold.
Existing Subaward Account Codes — $25,000 MTDC Threshold (Current Practice)
| $25K Threshold Met | Description | $25K Threshold Not Met | Description |
|---|---|---|---|
| 7012 | $25K threshold met – no further IDC (#1) | 7021 | $25K threshold not met – IDC calculated (#1) |
| 7013 | $25K threshold met – no further IDC (#2) | 7022 | $25K threshold not met – IDC calculated (#2) |
| 7014 | $25K threshold met – no further IDC (#3) | 7023 | $25K threshold not met – IDC calculated (#3) |
| 7015 | $25K threshold met – no further IDC (#4) | 7024 | $25K threshold not met – IDC calculated (#4) |
| 7016 | $25K threshold met – no further IDC (#5) | 7025 | $25K threshold not met – IDC calculated (#5) |
| 7017 | $25K threshold met – no further IDC (#6) | 7026 | $25K threshold not met – IDC calculated (#6) |
| 7018 | $25K threshold met – no further IDC (#7) | 7027 | $25K threshold not met – IDC calculated (#7) |
| 7019 | $25K threshold met – no further IDC (#8) | 7028 | $25K threshold not met – IDC calculated (#8) |
| 7020 | $25K threshold met – no further IDC (#9) | 7029 | $25K threshold not met – IDC calculated (#9) |
These codes are currently used in Banner (Chart D). Chart S may continue to use these codes as applicable.
New Subaward Account Codes — $50,000 MTDC Threshold (Future Practice)
| $50K Threshold Met | Description | $50K Threshold Not Met | Description |
|---|---|---|---|
| 8050 | $50K threshold met – no further IDC (#1) | 8059 | $50K threshold not met – IDC calculated (#1) |
| 8051 | $50K threshold met – no further IDC (#2) | 8060 | $50K threshold not met – IDC calculated (#2) |
| 8052 | $50K threshold met – no further IDC (#3) | 8061 | $50K threshold not met – IDC calculated (#3) |
| 8053 | $50K threshold met – no further IDC (#4) | 8062 | $50K threshold not met – IDC calculated (#4) |
| 8054 | $50K threshold met – no further IDC (#5) | 8063 | $50K threshold not met – IDC calculated (#5) |
| 8055 | $50K threshold met – no further IDC (#6) | 8064 | $50K threshold not met – IDC calculated (#6) |
| 8056 | $50K threshold met – no further IDC (#7) | 8065 | $50K threshold not met – IDC calculated (#7) |
| 8057 | $50K threshold met – no further IDC (#8) | 8066 | $50K threshold not met – IDC calculated (#8) |
| 8058 | $50K threshold met – no further IDC (#9) | 8067 | $50K threshold not met – IDC calculated (#9) |
These codes are established in Chart S and may be used by Chart S now, but may not be used in Banner (Chart D) until Drexel’s updated NICRA is approved. Once approved, these codes will apply to new awards only and are not retroactive.
Next Steps
Once Drexel’s updated NICRA is approved, Research Accounting Services (RAS) will issue follow-up communication confirming the effective date and will provide guidance and training on the appropriate use of the new account codes and threshold amounts.
Questions may be directed to Research Accounting Services at ras@drexel.edu.